French president faces tough new year

AP News
Posted: Dec 18, 2012 10:14 AM
French president faces tough new year

PARIS (AP) — France's President Francois Hollande may be facing a tough 2013, now that the opposition conservatives have ended a month of internal feuding and the Socialist leader struggles to solve the problems of Europe's No. 2 economy.

Assailed by leftists who say he capitulated to a steel magnate instead of nationalizing a flailing factory, the Socialist leader is also watching as the rich and famous flee his government's high taxes, and his efforts to boost competitiveness fail to halt rising unemployment.

Now that the opposition conservatives have ended a month of internal feuding, Hollande may be facing an even tougher New Year in 2013.

Meanwhile, the deep economic crisis is fueling doubts that his government has what it takes to address France's problems. And questions about Hollande's leadership abilities are bad for all the countries that use the euro, as the eurozone struggles with a new recession and tries to find new sources of growth.

Seven months after he beat conservative Nicolas Sarkozy for the presidency, Hollande's popularity is lagging badly — the latest polls show just 37-40 percent support — even as tensions mount between members of his government. Newsmagazine covers portray him under headlines like "Hollande: The Surrender" and "The Rejection."

Unemployment is higher than at any time since 1999, hitting 10.3 percent in the third quarter after rising for 18 months straight.

Pollsters say Hollande's unpopularity has more to do with external factors, such as Europe's overall debt crisis and the attractiveness of cheaper emerging economies for big investors and companies, than his own job performance.

The main explanation is "deep economic crisis and its consequences on the day-to-day life in France," said Frédéric Daby, deputy general director of the French Agency of Public Opinion, or Ifop. "As long as there is no change in rising unemployment and loss of purchasing power, there's no turnaround possible," Daby said.

Hollande's unpopularity can also be explained by an unclear communication strategy — in which one minister says one thing, a presidential adviser says another, and the president himself says something else — that sometimes looks like hesitation, sometimes cacophony in the ranks of the government. The huge polemic over the on-again, off-again nationalization of the Florange steel plant in northern France symbolizes this problem.

The minister who supported the idea of nationalizing the ArcelorMittal plant, Arnaud Montebourg, threatened to resign amid public criticism from Prime Minister Jean-Marc Ayrault, who described the nationalization idea as "inefficient."

In the end, a deal concluded by the government with the world's top steelmaker was seen largely as a failure by Socialist supporters. It appeared like Hollande "gave up" in front of ArcelorMittal's chairman Lakshmi Mittal, Daby said.

The French president also faces sharp resistance over his plans to raise new taxes, including a 75-percent bracket for revenue over €1 million ($1.32 million). The debate intensified when actor Gerard Depardieu announced last week his intention to turn in his French passport and move to Nechin, Belgium, a village that has drawn other high-earning French residents.

A bitter succession battle among his rivals that has divided the opposition for weeks now seems to have ended, raising further worries for Hollande.

France's conservatives resolved their internal dispute on Monday, with a deal between the two politicians fighting for the head of Sarkozy's Union for a Popular Movement party, hard right legislator Jean-Francois Cope and the more moderate former Prime Minister Francois Fillon. The battle distracted the conservatives' attention for a month, but there is no doubt they are now going to put pressure on Hollande's government.

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Hollande's Socialist Party also suffered defeat Sunday in three local by-elections that were viewed as a test of his popularity. The three winners are all conservatives.

To fight back, Hollande has gone on the road to promote his reforms. On Monday, he visited a factory in the center of France, to defend a package of measures to tackle France's flagging competitiveness — part of it is €20 billion ($25.5 billion) in tax cuts for employers during the next three years.

That competitiveness plan was seen as an example of a Hollande-esque phenomenon: He promises big changes, then meets resistance, then settles on a compromise that comes under widespread criticism. A former Airbus chief, at Hollande's request, put together sweeping recommendations to provide a "shock" to the French economy. Hollande's government decided on limited corporate tax cuts that leftists said were a gift to big business and that conservatives said were too limited to attract investors or keep them in France.

A similar pattern occurred with the 2013 budget, and a plan to change the school calendar, and again on Tuesday with a proposal to study assisted suicide. After promising during his election campaign to legalize it, Hollande ordered a report on the issue that was delivered Tuesday — then said the issue should undergo more study and be looked at again next summer.